Advertisement

House prices rise by three times the average salary

The cost of buying a house in the South West has increased by nearly three times the rate of an average salary over the past decade Photo: redit: Chris Radburn/PA Wire/Press Association Images

The cost of buying a house in the South West has increased by nearly three times the rate of an average salary between 2001 and 2010.

The situation leaves thousands of people with no hope of ever getting on the housing ladder, according to research by the National Housing Federation.

It found that in 2001 the average price of a home in the South West was £119,823, and the average salary was £14,794. In the space of ten years the price of a home has rocketed to £223,870, an increase of 87%, whereas wages have risen just 29% to £19,058, making buying a home increasingly unaffordable, especially for first time buyers.

Overall the South West has seen a 45% increase in the gap between house prices and wages between 2001 and 2010. Among the 10 worst affected areas are The Cotswolds, South Gloucestershire, the Forest of Dean, Sedgemoor, Cheltenham, North Somerset and Mendip.

During the same period, getting a mortgage has also got harder, with the amount of deposit needed rising by 367%.

In 2001 the deposit for a typical 90% mortgage, (available in 2001) was £11,982. By 2011 the amount banks were willing to lend was less, and so the deposit needed for a typical 75% mortgage leapt to £55,967.

Jenny Allen, South West lead manager for the National Housing Federation, said:

'These shocking figures show that it is getting increasingly hard for thousands of people in the South West to buy a home of their own in the current climate.

‘With house prices rising by 80% or more in much of the South West over the past decade, home ownership continues to be out of reach for ordinary families, and looks set to continue to be so for the foreseeable future.'

– National Housing Federation

She added that unless truly affordable homes are built to match the demand, the situation is likely to get worse.